2. This fraud went on for years. What do you believe allowed Peters to get away

Question

2. This fraud went on for years. What do you believe allowed Peters to get away with this for so long, especially given the fact that many of the investors were financially sophisticated? Amount: $3.65 billion Scheme: According to the government, Peters attracted massive investments from hedge funds and other institutions, ostensibly to buy consumer electronic goods and re-sell them to national big-box stores like Costco and BJ's. But there was no such buying and selling. http://www.justice.gov/usao-mn/tom-petters-case-summary

Explanation / Answer

There are many reasons that allowed Peters to get away with this Ponzi scheme, but the most important reason is the greed and the lure of earning high return upon the investment made by the investors without verifying the return claims and supporting documents.
A Ponzi scheme is based upon issuing high returns to old investors from the funds invested by the new investors and the cycle continues unless it busted. The same happened in this case. Peter produced fabricated documents, fake financial statements and personal guarantees, promissory notes to make investors to believe upon him and the past records of paying the old investors were always acting a point of trust for the new investors. Further, Deanna Coleman as co-conspirator and her attorney was also involved to assist the Peter in all these wrongdoings. It means that there was a deliberate effort to give a law and regulation compliant investment scheme that made the investors to not to go with any verification at their own level. It led to the flow of founds forms the investors for the longer period of time.

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